Indian Oil looks to supply LPG to northeastern states via Bangladesh

State-owned Indian Oil Corp. Ltd is planning to adopt a new way of supplying cooking gas to the far flung northeastern states by first exporting it to Bangladesh in a move that will drastically cut the refiner’s freight cost and help in integrating the energy markets in the two Asian nations, chairman Sanjiv Singh said.

The idea is to ship liquefied petroleum gas (LPG) either from Paradip port in Odisha or from the Haldia port in West Bengal to the Chittagong port in Bangladesh from where it could be moved by road before further exporting to bordering Indian states like Tripura, Assam and Meghalaya. This will do away with the need for transporting LPG that India imports in the eastern coast through a long-winding route covering the states of Bihar and Assam along what is referred to as the “chicken neck” to states further in the East. “We are in advanced stages of talks with some of the Bangladesh companies for LPG export to Bangladesh for re-export to North East of India. This should happen soon,” said Singh. It is expected to improve LPG supply in northeast and boost the Bangladesh economy.

“The efficiency gain will be huge. It is a win-win for everyone,” said Singh, adding that Chittagong has LPG import terminals, from where, Tripura is not far. The NDA government is on a drive to boost consumption of the clean cooking fuel, which will improve women’s health by replacing other polluting fuels and reduce kerosene consumption. The drive has seen LPG imports and consumption go up sharply.

India has been pursuing closer ties in the energy sector with Bangladesh helping the markets to integrate. Indian Oil Corp. is also exploring long term deals with Bangladesh companies for supplying LPG and other petroleum products. A plan for setting up a large LPG import terminal in partnership with local companies, allowing large vessels to arrive in the Chittagong port, is also on the drawing board. India is currently investing heavily in energy infrastructure to develop its long neglected eastern part. Long-distance gas pipelines as well as city gas distribution network are part of this. Bangladesh will be an ideal partner for expanding this network to the northeast region. India’s ONGC Tripura Power Co. (OTPC) is already exporting power from Tripura to Bangladesh. “I think there is a lot of synergy that is possible (between the two nations), said Singh.